One idea could be that in their human forms, Happy and Carla are part of a detective agency in Magnolia. Happy is the enthusiastic junior detective while Carla is the more serious and observant one. They solve mysteries related to magic items that have gone missing, often running into other Fairy Tail members who unknowingly hold clues.
In some fanfiction, a human who is an artist finds a fairy tail. The fairy in the tail has the power to bring art to life. The human and the fairy work together to create a beautiful, magical art gallery. They invite other humans and fairies to see their creations, spreading happiness and harmony between the two worlds.
His loyalty would still be a big part of his personality, but it could be expressed differently. Instead of just following Natsu around like he did as an Exceed, he might try to support Natsu in more strategic ways as a human, using his newfound human intelligence.
One idea could be that Happy, in human form, discovers a new magic power that only humans can possess. He then has to learn how to control it while also dealing with the strange human emotions that come with it.
Another focus could be on their powers. In human form, their magical abilities might manifest in new ways. Maybe they can combine their powers in a unique way that was not possible before. They could use these new powers to protect the human world from threats that are related to the magic world of Fairy Tail.
One of the funniest scenarios could be when Happy tries to 'help' Natsu cook but just ends up making a huge mess. He might accidentally add too much of an ingredient or knock over pots while flying around the kitchen in excitement.
One idea could be that Happy's death shatters the Fairy Tail guild. Natsu, being his closest friend, goes into a deep depression. The guild loses its usual cheer and the members struggle to come to terms with the loss. They might hold a grand memorial for Happy, and throughout the fanfiction, it could show how each character copes in their own way, like Lucy writing in her diary about all the memories she had with Happy.
There's a fanfiction called 'Happy and the Lost Treasure'. In this story, Happy teams up with some unlikely allies in search of a legendary treasure. It has a lot of humor as Happy's antics keep the other characters on their toes. The story also has some really cool action scenes where Happy uses his flying skills to outmaneuver enemies.
In this kind of fanfic, the key elements often involve Happy's new abilities as a dragon. For example, he might have the power to fly faster and breathe different types of magic breaths. Also, the story could explore how Happy copes with this new identity. Does he feel isolated at times? How does he interact with the dragon community if there is one in the fanfic? These are all important aspects.
Another possibility is an accident within the story. Perhaps during a chaotic battle or a magical experiment gone wrong, Happy could be caught in the crossfire or affected by some unforeseen magical consequence. This would be a tragic turn of events for the usually cheerful and helpful Exceed.